Dividends Stock Splits

1) The board of directors voted for a 2:1 stock split. Prior to the split, the company had 50,000 shares of $10 par common stock. What is the effect of the stock split? If a journal entry is required, then include in your answer.

2) Create the journal entry if ABC Company declares and pays a property dividend payable in bonds of DEF Company (bonds are being held to maturity and are carried on ABCs books at book value of $40,000, but their market value is $48,000)

NOTE: Small stock dividends are treated differently than large stock dividends. A small dividend is less than 20 to 25% of the previously outstanding shares. You can research this treatment in your old intermediate textbook or the web.

3) ABC Company declares and issues a 10% stock dividend. On the date of declaration, the stock is selling for $20. The corporation has 20,000 shares issues and outstanding before the stock dividends. It is $10 par stock. Show the journal entries.

4) Same as 3) above except ABC declares and issues a 40% stock dividend.

5) Describe what happens on each of the three following important dividend dates in words and illustrating any necessary journal entry.

Date of declaration

Date of record

Date of payment